TREASURIES-Longer-dated US yields slip after data as trade talks eyed

By Chuck Mikolajczak

NEW YORK, June 3 (Reuters) - Longer-dated U.S. Treasury yields dipped on Tuesday, as investors awaited updates on tariff talks and budget negotiations, but were off earlier lows after a report on the labor market.

U.S. President Donald Trump is expected to speak with Chinese leader Xi Jinping, days after Trump accused China of violating a deal to roll back tariffs and trade restrictions.

The Trump administration wants countries to provide their best offer on trade negotiations by Wednesday as officials seek to accelerate talks with multiple partners ahead of a self-imposed deadline in just five weeks, according to a draft letter to negotiating partners seen by Reuters.

"We're largely range-bound here and the market, akin to the Fed, but different. We really need something to have us break out of this trend, for better or for worse," said Karen Manna, portfolio manager and investor of fixed income at Federated Hermes in Pittsburgh.

"It does seem to be about policy and perceptions and what is captivating the markets at that time, but the hope that the Fed moves and the 10-year follows is perhaps more hope than potential reality."

The yield on the benchmark U.S. 10-year Treasury note US10YT=TWEB fell 0.4 basis points to 4.458% after hitting a session low of 4.406%.

Yields pared declines after the Labor Department said its Job Openings and Labor Turnover Survey, or JOLTS report, showed openings, a measure of labor demand, rose 191,000 to 7.391 million by the last day of April, but layoffs rose in a sign of possible cooling.

The data is the first in a string of reports on the labor market this week, culminating with Friday's government payrolls report.

The yield on the 30-year bond US30YT=TWEB fell 1.6 basis points to 4.979%.

Many Fed officials have indicated a patient approach to determine the effect the levies may be having on prices, although they have also indicated rate cuts may still be possible this year.

Atlanta Federal Reserve President Raphael Bostic said on Tuesday a strong economy gives the U.S. central bank time to weigh how tariffs will impact inflation and growth, while remaining open to the possibility of a single interest rate cut at some point later this year.

Chicago Fed President Austan Goolsbee said higher inflation from U.S. import tariffs could become evident quickly, but it would take longer to see a tariff-induced economic slowdown while Governor Lisa Cook said that it’s not possible to rule out a rate hike as part of the monetary policy outlook.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes US2US10=TWEB, seen as an indicator of economic expectations, was at a positive 49.9 basis points.

The two-year US2YT=TWEB U.S. Treasury yield, which typically moves in step with interest rate expectations, 1.2 basis points to 3.957%.

Investors were also eyeing negotiations in Congress over a sweeping budget package that contains many of Trump's priorities, including tax cuts along with cuts to healthcare.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) US5YTIP=TWEB was last at 2.383% after closing at 2.397% on Monday.

The 10-year TIPS breakeven rate US10YTIP=TWEB was last at 2.336%, indicating the market sees inflation averaging about 2.3% a year for the next decade.